sebi:WTM/MPB/EFD-1-DRA-IV/117/2018

SEBI · SEBI · 2013-11-01 · Madhabi Puri Buch, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Noticees found to have violated Section 12(1) of the SEBI Act and Regulation 3 of the PMS Regulations; directions issued for refund of money, debarment from securities market for 4 years from date of refund, and other remedial measures.

Provisions invoked

• s. 11B
• s. 11
• s. 11(4)
• s. 19
• s. 12(1)
• s. 12
• s. 28A

Regulations

• Reg. 3
• Reg. 2

Parties

• SBS Investments
• Mr. Srinivasa Thanga Durai
• Ms. P. Soundaravalli

Holding

SBS Investments and its partners Mr. Srinivasa Thanga Durai and Ms. P. Soundaravalli were found to have provided unregistered Portfolio Management Services to at least 47 clients, violating Section 12(1) of the SEBI Act and Regulation 3 of the PMS Regulations. The Noticees were directed to refund all money collected along with promised returns, and were barred from accessing the securities market for 4 years from the date of refund.

Full text

Order in the matter of SBS Investments Page 2 of 13 holding 80% capital in the firm and Ms. P.Soundaravalli (PAN-FLJPS3301B) holds 20% of the capital in the firm. As per their Partnership Deed dated November 1, 2013, the nature of the business is to – “to receive money in deposit at interest or otherwise for fixed period…to manage investment pools, mutual funds’, syndicates in shares, stocks and securities” 3.3 From the documents submitted by the company such as copy of the agreement entered into by SBS Investments (“Asset Management Company (AMC)”) with its investors, copy of the Pamphlets, it is observed that SBS Investments is soliciting money from the investors and investing them in securities and promises to share the profits received. Investors are generally passive investors as the shares are bought based on the sole advice of the managing partner of SBS Investments. No fees were charged from the investors. Investors are assured of a monthly return of 2.5% or 30% per annum. The minimum lock-in period for investment is 3 months. 3.4 Through its website viz., “http://www.sbsinvesments.in.” SBS Investments offered Portfolio Management Services and various short term and long term investment services to the investors. 3.5 SBS Investments was collecting funds from the investors and manages their funds by investing in Equity market. 3.6 SBS Investments and its Partners Mr. Srinivasa Thanga Durai (Managing Partner) and Ms. P. Soundaravalli, (Partner) were not registered as a

Order in the matter of SBS Investments Page 3 of 13 b. immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, website, etc. in relation to their portfolio management activities or any unregistered activity in the securities market; c. not to divert any funds raised from the investors. d. to furnish all the information/details sought by SEBI vide letters dated November 04, 2015 and December 22, 2015 within 21 days from the date of receipt of this order.”

Order in the matter of SBS Investments Page 4 of 13 before SEBI on the aforesaid date, then the matter would be proceeded ex-parte on the basis of material available on record. The hearing notice was also served to the Noticees vide e- mail dated November 22, 2017. 9. Mr. Srinivasa Thanga Durai (Managing Partner) appeared in person for SBS Investments and made the following submissions: i. SBS Investments collected deposits and that he was under the assumption that their activities come under the category of CIS; ii. SBS Investments had about 47 clients and owes about Rs. 65 lakh to its investors. It has also submitted that they had repaid Rs.8 lakh to 12 investors.

Source: SecMarx — sebi:WTM/MPB/EFD-1-DRA-IV/117/2018. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.